Starting SS at 65 before FRA - how to handle vacation payout, part-time income, and Mary Kay side business?
I'm planning to retire from my main job next year when I turn 65, but I know my Full Retirement Age is 67. I have several questions about timing and income limits that are driving me crazy! First, my company will pay out my unused vacation time as a lump sum when I leave - does that count toward the SS earnings limit? I'm also planning to look for part-time work after I retire, but I might find something full-time that I like. If that happens, is it difficult to pause my Social Security benefits? And what about my small Mary Kay side business? It's really just a hobby that makes maybe $200-300 a month - how does SS count that toward the monthly earnings limit? I feel totally lost about when exactly I should apply for benefits before my retirement date. Two months before? Three months? Any guidance would be greatly appreciated!
18 comments
Join the conversation
Oliver Becker
im on SS now... started at 62... wish I waited longer tbh
0 coins
Amina Bah
•Really? Why do you wish you'd waited? I'm trying to decide if 65 is too early for me.
0 coins
Natasha Petrova
Here's what you need to know: 1. Vacation payout: This counts as wages in the year you receive it, even as a lump sum. Since you're retiring before FRA (67), you'll be subject to the earnings test if you earn above the limit, which for 2025 will likely be around $22,320 (it's $21,240 for 2023 plus annual adjustments). 2. Application timing: Apply 3 months before you want benefits to start. SSA recommends this timeframe for smooth processing. 3. Pausing benefits: If you find full-time work, you can ask SSA to suspend your benefits. It's not complicated but requires formal notification. If you expect to earn over the limit, this is smart to avoid overpayments. 4. Mary Kay income: As self-employment income, SSA counts net profit (after business expenses), not gross sales. Keep good records of business expenses to reduce countable income. They calculate this on an annual basis, not monthly.
0 coins
Amina Bah
•Thank you so much! This is exactly what I needed. For the Mary Kay business, I'm meticulous about tracking expenses. Do they average my annual self-employment income over 12 months, or does it matter which months I actually earn it in?
0 coins
Javier Hernandez
my sister got her vacation payout and it totally messed up her SS payments cause she went over the income limit!! they made her pay back some benefits. really annoying!!
0 coins
Emma Davis
•THIS IS WHY THE SYSTEM IS BROKEN!!! They don't even bother explaining this to people and then hit you with SURPRISE OVERPAYMENTS months later. They did the same thing to my cousin and it took EIGHT MONTHS to resolve. The SSA is completely disorganized and expects us to understand their incomprehensible rules.
0 coins
LunarLegend
I had a similar situation with my Avon business when I started collecting SS at 63. What they do is look at your NET earnings from self-employment (after expenses), not your gross sales. For Mary Kay, you can deduct inventory purchases, mileage for deliveries, home office space if applicable, marketing materials, etc. For me, after all legitimate business expenses, my Avon "profit" was low enough that it didn't affect my benefits. Just make sure you keep VERY detailed records in case they ask for verification. I also found it nearly impossible to get someone on the phone at SSA when I had questions. After wasting hours on hold and getting disconnected multiple times, I finally used this service called Claimyr (claimyr.com) that got me through to a real person at SSA in about 20 minutes instead of waiting for hours. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU. Completely worth it for getting my questions about self-employment income answered by an actual representative.
0 coins
Malik Jackson
•Self-employment income can be complicated with Social Security. One important thing to note is that SSA looks at your net earnings from self-employment after all business deductions are taken on your Schedule C. But they calculate this on an annual basis, not monthly. So if you earn $3,600 for the year from Mary Kay after expenses ($300/month average), that's what counts toward your annual earnings limit regardless of which months you actually earned it in.
0 coins
Amina Bah
•Thanks for the tip about Claimyr! I've been dreading the phone tag with SSA, so I'll definitely check that out. And thanks for explaining about the Avon business - sounds very similar to my Mary Kay situation.
0 coins
Isabella Oliveira
I retired at 65 last year. Applied for SS 3 months before I wanted benefits to start (good timing). My company also paid out vacation - about $3k. That plus my regular salary put me over the earnings limit for the year, and SS reduced my benefits by $1 for every $2 I was over. Just be prepared for that. Also, make sure you understand Medicare enrollment - that's a whole separate thing you need to handle at 65 regardless of when you take SS!
0 coins
Amina Bah
•Oh wow, I hadn't even thought about Medicare being separate! I assumed they were handled together. I'll need to look into that right away. Thank you!
0 coins
Emma Davis
The SSA makes EVERYTHING needlessly complicated!! I started benefits at 64 and found out the hard way that you can't just "pause" benefits easily. You have to WITHDRAW your application within 12 months of starting (which means paying EVERYTHING back), or wait until FRA to SUSPEND benefits. There's a HUGE difference between withdraw and suspend that they don't make clear! And if you earn too much, they'll just take your money away anyway through their earnings limit penalty. It's RIDICULOUS!
0 coins
Natasha Petrova
•You're right that there's an important distinction between withdrawal and suspension. Just to clarify for the original poster: - Withdrawal: Must be done within 12 months of starting benefits. You repay all benefits received and it's like you never applied. - Suspension: Can only be done after reaching full retirement age. You keep what you've received but benefits stop until you request reinstatement. Your benefit amount grows by 8% per year while suspended. But before FRA, if you expect to earn over the limit, you can simply report this to SSA, and they can adjust your benefits accordingly to avoid overpayments.
0 coins
Oliver Becker
i wish i waited til 67 cuz my check woulda been like $600 more each month... adds up over time ya know
0 coins
Amina Bah
•That's a really good point. I need to calculate the difference between taking it at 65 vs 67 in my case.
0 coins
Malik Jackson
For the Mary Kay business, Social Security looks at your profit (revenue minus expenses) as reported on your Schedule C. This is considered self-employment income. For 2025, if you're receiving benefits before FRA, you'll be subject to the earnings limit (approximately $22,320 for the year). One important detail: Self-employment income counts when you receive it, not when you earn it. So if clients pay you in December 2025, that counts for 2025 even if the work was for January 2026. Regarding when to apply, the optimal time is 3 months before you want benefits to begin. You can specify a start date in your application, so you can apply before you retire and have benefits begin afterward.
0 coins
Javier Hernandez
•wait is that true about when u get paid vs when u do the work?? i didn't know that! i have a small woodworking business and sometimes people pay me months after i do the work
0 coins
Malik Jackson
•For self-employment income, the general rule is that income counts when received, not when earned. This is called the "cash basis" of accounting, which most small businesses use. If you're using accrual basis accounting (less common for small businesses), different rules apply. But for most side businesses like Mary Kay or woodworking, the income counts in the year you receive payment.
0 coins